The Central Bank of Nigeria (CBN) has cut interest rates on all intervention facilities from nine to five per cent per annum.
The regulatory for bearance would allow banks to restructure loans given to sectors severely affected by the Covid-19 pandemic and strengthen the Loan to Deposit Ratio (LDR) policy, which has resulted in a significant rise in loans provided by financial institutions.
In a circular released at the weekend, the apex bank said the move was to address the effect of the Covid-19 pandemic on the Nigerian economy.
CBN Director, Financial Policy and Regulation Department, Chibuzo Efobi, explained that in uncertain times, there was always a way to ensure that businesses survived, including granting forbearance.
He said the regulatory forbearance also includes restructuring of credit facilities impacted by Covid-19.
In the circular addressed to all banks and other financial institutions, Efobi said the extension of the five per cent per annum interest rate on all CBN intervention facilities was for one year, adding that the policy took effect retrospectively from February 28, 2022.
CBN’s data showed that total gross credit to businesses rose from N19.4 trillion to N23.5 trillion in the last one year, representing over 21.1 per cent increase.
In a state of the economy and financial sector report, the apex bank said agriculture, manufacturing, power and healthcare took the lion share of the loans disbursed.
The loans to benefit from the interest rate cut include N1 trillion facility in loans to boost local manufacturing and production across critical sectors of which 53 major manufacturing projects, 21 agriculture-related projects and 13 service projects are being funded.
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The list also includes the N100 billion intervention fund for pharmaceutical companies and healthcare practitioners meant to expand and strengthen the capacity of the healthcare institutions that will also benefit from the fund.
